Managed Care, Medicaid and Mental Health Resource Guide

What Is Managed Care? Figure 1 Managed care is an approach to financing and delivering health care that seeks to control costs and ensure or improve quality of care through a variety of methods, including provider network management, utilization management and quality assurance.

Historically, Medicaid services for disabled beneficiaries, including mental health services, have been provided on a fee-for-service basis where providers are paid for each billable service provided. In contrast, managed care Medicaid programs pay for some or all services at a prepaid rate, often based on enrollment.

States rely heavily on managed care for Medicaid beneficiaries. In 2008, 71 percent of enrollees were in care,1 but the majority of Medicaid managed care enrollees are children and families, whose costs tend to provide all benefits on a per member per month basis, be much lower than for elderly and disabled enrollees known as full capitation. If enrollee use of services (Figure 1). Today, states are increasingly looking to exceeds capitation payments, the managed care plan must managed care as a strategy to contain costs for individuals pay the additional costs. If enrollees use fewer services, with complex needs, including children and adults who the plan may keep or reinvest unused funds. live with serious mental illness. In a partial risk contract, the managed care plan is prepaid Whether managed care plans improve or impair access to deliver a subset of services, such as mental health case to, and quality, of care depends on a variety of factors. To management or crisis services, with other services help advocates assess and influence state Medicaid mental reimbursed on a fee-for-service basis. Alternatively, a health care programs, NAMI’s Resource Guide on Managed partial risk managed care plan may be at risk for costs Care, Medicaid and Mental Health provides important or gains that exceed a pre-determined margin above and information, advice and tools. below a targeted cost.

Managed Care Structures Administrative Services Organizations (ASOs) are Managed care takes a wide variety of forms and names, contracted to administer, or manage, claims and benefits including the following common structures and models: for a fixed administrative fee while bearing little or no risk for the cost of delivering care. ASOs may also contract to Risk-based Managed Care Entities (MCEs) are provide other functions, such as provider and member contracted to provide and manage benefits. In afull risk services, data reporting, provider network development, contract, the MCE, or managed care plan, agrees to care coordination and disease management services.

Managed Care, Medicaid and Mental Health Resource Guide Section 1 | Page 1 | 2011 www.nami.org/stateadvocacy Provider-Based Managed Care Strategies entity that specializes in providing mental health benefits. Primary Care Case Management (PCCM) is a managed In a carve-out or separate plan, mental health benefits care model in which the purchaser reimburses may be provided on a fee-for-service basis or a Medicaid treatment services on a fee-for-service basis but pays agency may contract separately with a managed care plan selected primary care providers a monthly case for mental health benefits. management fee to authorize, coordinate and monitor all necessary care for patients. Prescription drug benefits, like mental health services, may be managed by a single integrated plan but are often Enhanced PCCM models use various methods to subcontracted to another entity or provided on a fee-for- improve coordination and management of care for service basis. Because of the unique nature of psychiatric enrollees with chronic conditions, such as serious mental medications and the vulnerability of Medicaid enrollees illness or co-occurring conditions. who live with serious mental illness, psychiatric medica- tions may be exempt from managed care requirements. Patient-Centered Medical Home (PCMH) uses various managed care strategies to promote a patient- Managed Care Results centered approach with expanded hours, coordination Rather than the specific managed care model, structure or and management of care by a primary provider and for-profit/nonprofit status, it is often contractual team-based comprehensive services to meet multiple requirements, fiscal incentives, oversight and leadership physical, substance abuse and mental health needs. that have the most significant impact on how a managed care plan will meet the needs of children and adults living Mental Health Benefits in Managed Care with mental illness and co-occurring substance use or Mental health and other medical benefits may be primary care disorders. For this reason, understanding managed by a single managed care plan in what is known managed care responsibilities and other key issues is as an integrated plan. In a subcontracted plan, important for mental health advocates. management of mental health benefits may be transferred by the managed care plan to another entity, often an

Mental Health Carve-in Mental Health Subcontracted Mental Health Carve-out (Integrated Plan) (Subcontracted Plan) (Separate Plan) A managed care plan manages both A managed care plan is responsible for Mental health benefits are provided on a mental health and other medical both mental health and other medical fee-for-service basis or are provided by a benefits. benefits but subcontracts management of separate managed care plan that is not mental health benefits to another entity, responsible for other medical benefits. often one that specializes in providing mental health benefits.

Psychiatric Rx Carve-in Psychiatric Rx Subcontracted Psychiatric Rx Carve-out (Integrated Plan) (Subcontracted Plan) (Separate Plan) A plan manages the prescription drug A plan is responsible for the prescription Psychiatric medications are provided on benefit, including psychiatric drug benefit, including psychiatric a fee-for-service basis or, if subject to a medications. medications, but subcontracts managed care approach such as a management to a separate entity, often a preferred drug list, are exempt from pharmacy benefits manager (PBM). authorization requirements or other access barriers.

Managed Care, Medicaid and Mental Health Resource Guide Section 1 | Page 2 | 2011 www.nami.org/stateadvocacy Managed Care Responsibilities Most managed care responsibilities fall under one of the Advocacy Tips following five categories. Understanding these areas of Develop Relationships responsibility can help advocates strengthen contractual Meet regularly with your state Medicaid director and requirements and use oversight and other mechanisms to with the behavioral health directors and medical influence mental health care. These areas are addressed in directors of Medicaid managed care plans. NAMI’s Medicaid Managed Care, What to Ask: A Checklist for Advocates and in additional Resource Guide materials. Stay Focused NAMI’s goal is to ensure that children and adults living with mental illness receive the right care at the right 1. Utilization and Clinical Management: Monitor- time and right place to experience lives of resiliency, ing of covered services, utilization of services, care recovery and inclusion management, medical necessity criteria and service authorization or discharge. Learn the Issues and Ask Questions 2. Provider Network Management: Establishment of Use NAMI’s Resource Guide on Managed Care, Medicaid and Mental Health to understand key provider networks to meet access standards, provider managed care issues and to ask questions that will credentialing requirements and practice standards. help inform your advocacy. 3. Quality Assurance: Collection of data, reporting and analysis and use of performance, process and outcome measures and member surveys. May include care coordination or other quality assurance and improvement functions. 4. Rates and Claims: Monitoring of fraud and abuse, establishment of provider rates and claims payment procedures. 5. Customer Service, Appeals and Grievance: Provi- sion of member information and grievance and appeal processes.

1Kaiser Commission on Medicaid and the Uninsured. (February 2010). Medicaid and Managed Care: Key Data, Trends and Issues. www.kff.org/medicaid/8046.cfm. March 23, 2011. 2Fields, S., and English, K. (2011). Managed Behavioral Health Care Today [Webinar presentation]. Retrieved from www.nami.org/stateadvocacy.

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